Aquaculture Investment Profile

fingerlingsAt the risk of being accused of being negative towards the industry in which we are involved, the short answer is that if we were that negative we’d be out of it. Hence, far from being negative about it, we’re in it, with both feet.

However.

What works for us may not work for you.

Being aware of what you are getting yourself involved in is important. The frustrations are substantial and the future of aquaculture in South Africa has got to be viewed through the lens of what is the current situation. It is not good news, but just because it is not good news doesn’t mean you should ignore it and carry on regardless.

The realities are this.

South Africa, as a climate, for aquaculture, sucks. This is intended as a double meaning.

Firstly, our physical climate is awful. Too hot, or too cold, for too much of the year. Great for humans, bloody awful for consistent fish production in the great outdoors.

Our legislative environment is appalling. We have, at least count, 22 different government departments with potential interest in aquaculture. Job creation in aquaculture has been solely in bureaucratic appointments with the public wage bill far exceeding industry profits generated – this however cannot be verified because no-one actually seems to know.

The two major government departments involved in aquaculture are DAFF and DEA. The DEA tail however wags the DAFF dog and DEA have entrenched themselves as the go/no go authority in aquaculture in South Africa. This has come about for simple reasons of species selection for aquaculture. Local species are simply not viable for commercial aquaculture production.

Hence, exotic species are needed. These all require assessment and to ensure that such species don’t invade and impact on the environment and cause havoc and damage. A case in point is the nile tilapia, which was pointed out to DEA 17 years ago as having invaded the Limpopo river system. Today, DEA’s response has been to ban nile tilapia farming in Limpopo, despite conceding that the river system is already ‘lost’. The existing nile tilapia in the river system then get a free pass.

The nile tilapia is an important species for South Africa. Globally it is the most farmed tilapia species by a country mile – Egypt alone accounts for nearly one million tons of it annually, China leading the pack at guesstimates ranging from 4 to 5 million tons annually.

Tilapia is important for very simple reasons. It tastes good. It can be sold easily. It is a closed loop species. It is a freshwater species. It has far greater market appeal and reach than anything else.

Marine fin fish simply do not have the capacity to match tilapia in terms of tonnages of production. Tonnages are important – currently perhaps total tonnage of all fin fish production in South Africa is around 1,000 to 2,000 tons per annum? It’s so vanishingly small it might as well not exist at all. The cause of this stagnation has to be put firmly at government’s door.

Marine finfish production aside (we have lots of coast line, bugger all suitable sites, and unproven species), it will be to freshwater production that actual tonnages of fish will have to be produced if food security is indeed something government is interested in. The facts are that government is not interested in food security, at least not from aquaculture. We say this because we measure government not on their words, but on their actions.

Actions have resulted in small pockets of aquaculture development. Abalone remains a shining light of success, mainly because it is a super high value product that is exported, has taken 20 years to develop and makes money thanks to the insatiable demand in the East for the product. However, the red tape surrounding abalone and the long production cycles now ensure that only the extremely well heeled with deep pockets can afford to pony up the several hundred million rand it takes to establish a new farming operation. You cannot just start up a small scale abalone farm tomorrow – DEA permits and red tape will bury you long before you begin.

Trout, the other notable success in South Africa, is under siege from DEA. There are court cases going on with DEA being hauled in front of judges to explain their actions, as opposed to their words. This is all part of a long term strategy on the part of DEA to command and control the aquaculture sector, measured as they are on their actions. They’ll protest the opposite and cite that they’re juts trying to protect the environment but their actions on the nile tilapia invasion 17 years ago show us their true colours.

The reality for tilapia is this. DEA will dictate how, where, when and who will be allowed the privilege of farming tilapia in South Africa. Your permit will be granted on their terms, not yours. It will be a short term permit, currently 5 years, and you will always have the threat of having your permit not renewed if you do not toe the line. You will be required to document everything, and any new obligations to be thrust upon at any time will be done so without your consent, permission or even knowledge. Ask the trout industry.

There is talk of change. Be wary of talk. DEA has been talking for the last 20 years and another 20 is nothing. With regards to tilapia, currently DEA have deliberately stalled a SEA study that they themselves came up with as a stalling and delaying tactic for the species. The new Aquaculture Bill has been a pipe dream for the last ten years and it is 5 years overdue. The version that will finally be signed into legislation will be different from the one agreed to by interested and affected stake holders, and will then be taken to court by those that care for another decade or so of wasted time.

The question to all of this is why?

We have no idea, but the command and control approach would appear to be it. DEA would appear to be positioning themselves as the final and sole arbiter of aquaculture in South Africa, with complete control over who, when, where, how and what. Again, why? Perhaps because they think that they know better than anyone else what is good for all of us – but unfortunately their dreadful science proves otherwise. Perhaps it is from a misplaced sense of saving us from ourselves, and that as public servants their role is to dictate?

It doesn’t matter. The reality is what it is and you have to be aware of what it means. DEAs spoken words and intentions cannot be taken meaningfully when measured against their actions.

So why bother?

The market opportunity is enormous! There is a pantload of money to be made for aquaculture operations that are able to scale. With scale comes clout, and with clout comes the ability to deal with DEA concerns more effectively, using lawyers if you have to. Long term DEA is fighting a losing battle – the more they stifle and work against an industry which is going to happen despite their best efforts, the more a lack of co-operation between them and industry will manifest to the point where they will be rendered ineffective due to sheer weight of numbers. Ironically this will probably result in pristine nile tilapia free systems becoming over run by nile tilapia but in this industry cannot be portrayed as being uncooperative.

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